Orellana v. Macy's Retail Holdings, Inc., 17 Civ. 5192 (NRB)

Decision Date10 July 2018
Docket Number17 Civ. 5192 (NRB)
PartiesCINTHIA CAROLINA REYES ORELLANA and SAMYA I. MOFTAH, individually and on behalf of all similarly situated individuals, Plaintiffs, v. MACY'S RETAIL HOLDINGS, INC. d/b/a MACY'S f/k/a MACY'S EAST a/k/a MACY'S, INC.; LAW OFFICES OF PALMER, REIFLER and ASSOCIATES, P.A., Defendants.
CourtU.S. District Court — Southern District of New York


Before this Court is plaintiffs' motion for leave to amend their first amended class action complaint against Macy's Retail Holdings, Inc. d/b/a Macy's f/k/a Macy's East a/k/a Macy's, Inc. ("Macy's"). As a mercantile establishment, Macy's is authorized under two separate New York statutory schemes to (1) reasonably detain suspected shoplifters, and (2) collect civil penalties and damages therefrom. Plaintiffs' proposed amended class action complaint alleges that Macy's has abused and exceeded these authorizations by implementing them in combination. According to plaintiffs, Macy's demands that suspected shoplifters (1) pay, or agree to pay, civil penalties, and (2) confess to shoplifting, while they are being detained. Further, plaintiffs allege that Macy's falsely promises suspected shoplifters that they will be released if they meet Macy's demands, only to be subsequently arrested at Macy's behest.

Plaintiffs' proposed amended class action complaint asserts a variety of causes of action with respect to this conduct, including false imprisonment, fraud, abuse of process, and consumer deception. As we conclude that several, but not all, of plaintiffs' proposed causes of action state a claim for which relief could be granted, their motion for leave to amend is granted in part and denied in part. However, while the issue of class certification has not been fully briefed, we express concern that, for several reasons, the putative class could not be certified as it is defined in the proposed amended class action complaint.

I. Factual Background

Plaintiffs' proposed amended class action complaint is most readily understood in the context of the applicable New York statutory law, so we begin our background section with an explanation of those statutes.

a. Statutory Scheme

Section 218 of the New York General Business Law ("GBL § 218"), which codifies the common-law "shopkeeper's privilege," provides that "[i]n any action for false arrest, false imprisonment, unlawful detention . . . assault, trespass, orinvasion of civil rights" brought by an individual stopped at a retail establishment for investigation or questioning concerning "ownership of any merchandise[,] . . . it shall be a defense to such action that the person was detained in a reasonable manner and for not more than a reasonable time to permit such investigation or questioning[,]" and that the person detaining the individual "had reasonable grounds to believe that the person so detained was . . . committing or attempting to commit larceny on such premises of such merchandise." N.Y. Gen. Bus. Law § 218.

The purpose of GBL § 218 is "to protect merchants from false arrest suits even where the criminal actions are eventually dismissed," and to help "overcome the extreme reluctance with which merchants . . . attempt to interfere with shop-lifters." Jacques v. Sears, Roebuck & Co., 30 N.Y.2d 466, 472, 285 N.E.2d 871 (1972) (internal quotation marks omitted); see also Guion v. Associated Dry Goods Corp. (Lord & Taylor Div.), 56 A.D.2d 798, 798, 393 N.Y.S.2d 8 (1st Dep't 1977) ("[A]lthough store owners may not proceed with abandon to rectify the problem [of shoplifting], they should not be deterred from attempting to apprehend those responsible for the theft of merchandise."), aff'd, 43 N.Y.2d 876, 374 N.E.2d 364 (1978).

Section 11-105 of the New York General Obligations Law ("GOL § 11-105") provides, in relevant part, that "[a]n adult or emancipated minor who commits larceny against the property of amercantile establishment shall be civilly liable to the operator [thereof] in an amount consisting of," (a) "the retail price of the merchandise if not recovered in a merchantable condition," up to $1,500, and (b) "a penalty not to exceeded the greater of five times the retail price of the merchandise," or $75, "provided, however, that in no event shall such penalty exceed" $500. N.Y. Gen. Oblig. Law § 11-105(5), (6). Under the statute, "[t]he fact that an operator of a mercantile establishment may bring an action against an individual as provided in this section shall not limit the right of such merchant to demand, orally or in writing, that a person who is liable for damages and penalties . . . remit the damages and penalties prior to the commencement of any legal action." Id. § 11-105(8).

The Assembly and Senate bill jackets corresponding to GOL § 11-105's enactment announce its purpose as "authoriz[ing] a merchant to institute a civil cause of action for shoplifting violations instead of relying upon a District Attorney to institute a criminal cause of action for petty larceny." N.Y. Bill Jacket, S.B. 3916/A.B. 5783, 189th Leg., 1991 Sess., ch. 724, at 4-5 (1991).

The bill jackets go on to describe GOL § 11-105's intended benefits as follows:

The store owner will be authorized to recover damages against the shoplifter instead of being forced to raise prices against the public. Therefore, the personcommitting the crime will bear the expense of enforcement and litigation as opposed to having the public at large pay higher prices for shoplifting losses and surveillance expenses. The criminal courts will be relieved of prosecuting these cases. Further, this proposal will allow most cases to be resolved through a civil case or [out] of court settlement. Accordingly, teenagers and others who are caught will be allowed to resolve their shoplifting infraction without being saddled with a criminal record.

Id.; see also id. at 101 (Letter from Hon. Eric N. Vitaliano, The Assembly, State of New York, to Hon. Elizabeth D. Moore, Counsel to the Governor, State of New York (Sept. 3, 1991) (noting that retailers in states that have enacted similar provisions "have not felt compelled to pursue criminal process as the only way to stop the shoplifting crime wave")).

b. Plaintiffs' Claims and Causes of Action

Plaintiffs seek to represent a putative class of individuals who Macy's detained as suspected shoplifters, pursuant to GBL § 218 and GOL § 11-105, in its New York stores. Their proposed amended class action complaint describes Macy's "loss prevention" scheme as follows. Upon suspicion of shoplifting, a Macy's employee approaches a suspect and directs him to an "in-store jail[]" "complete with private search areas, handcuffs, and jail cells with adjoining desks." Proposed Amended Class Action Complaint ("PAC") ¶ 4, Jan. 8, 2018, ECF No. 28-2. Upon detention, the employee "perform[s] [a] full-body search[], inspect[s] the contents of the accused shoplifter's wallet, [and] conduct[s an]interrogation[]." Id. Key to this litigation, the loss prevention employee also promises the detained shoplifter that he will be released so long as he (1) completes a "promissory note," i.e., a civil demand notice,1 agreeing to pay, either immediately or in the future, a civil penalty, and (2) signs a confession.2 See id. ¶¶ 2, 4. Yet, according to the proposed amended class action complaint, contrary to the employee's representation, Macy's instead calls the police, and the suspect is held until he is arrested and transferred to police custody, along with a supporting deposition prepared by a Macy's loss prevention employee.3 Seeid. ¶¶ 2, 8, 29, 36, 54.

The proposed amended class action complaint asserts causes of action against Macy's for (1) false imprisonment, (2) abuse of process, (3) "fraud/unjust enrichment," (4) deceptive business practices in contravention of New York General Business Law § 349 ("GBL § 349"), N.Y. Gen. Bus. Law § 349, (5) "assault/battery," and (6) deprivation of civil rights under 42 U.S.C. § 1983. PAC ¶¶ 71-95. Plaintiffs seek, inter alia, a "permanent injunction of in-store demands for immediate payments, signed confessions, and promissory notes from suspected shoplifters in Macy's custody in New York," a refund of all moneys collected in custody, and money damages "to each Plaintiff that was subjected to in-store demands." Id. at 12.

c. Putative Class and Lead Plaintiffs

Plaintiffs define the class they seek to represent as consisting of "all persons who, while accused of shoplifting and detained by Macy's at their New York department stores, have been or will be subjected to in-store demands for confessions of shoplifting, and demands to pay civil penalties." Id. ¶ 19. There are eleven named plaintiffs whose interactions with Macy's are described below.

Cinthia Carolina Reyes Orellana, a 29 year old native of Honduras, was allegedly detained at Macy's Herald Square location in Manhattan in July 2014, "shortly after she emerged from a dressing room holding a few items of clothing and rode an escalator to another floor." Id. ¶¶ 26-27. Upon detention, Orellana (1) was told "she would be released as soon as [she] signed a paper admitting guilt and agreeing to pay Macy's a penalty equal to five times the price of the merchandise that was found on her," (2) paid $100 in cash, (3) signed a confession and civil demand notice, but (4) was not released, and instead turned over to police custody, supported by a deposition prepared by a Macy's loss prevention employee. Id. ¶¶ 28-29; see Feder Decl. Exs. A, L. The resulting criminal case against her was eventually dismissed. See PAC ¶ 31.

Samya Moftah, a 53 year old native of Egypt, was allegedly detained at Macy's Herald Square location in July 2015, after she was found in possession of previously purchased merchandise. Id. ¶¶ 32-33. Upon detention, and despite protestations of innocence, Moftah (1) was told she would be released as soon as she paid a $500 fine, (2) paid $500 via credit...

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